“That means international investors are looking at other markets as a better opportunity than the U.S. at the same time the U.S. economy is going to have to crawl through two years of sub-par performance (while) the housing market is ... correcting,” Battipaglia said Thursday. “Consumers are becoming much more defensive because they have more debt. Businesses are responding to that by cutting their capital spending. So, slow growth here retards the ability of this market to move materially higher and stay there.”
Bart Geer, portfolio manager for Putnam Equity Income Fund, said many U.S. companies do business overseas, and that’s reflected in strong earnings and solid stock performance.
“I think America is still a very good place to invest on a global basis,” Geer said. “That’s a positive that’s going to help drive large stocks from here.”
However, Battipaglia drew a distinction between individual stocks and the board market.
“These are individual companies versus the market in its entirety,” Battipaglia said. “The U.S.-centric model has been fine for many, many years but I think it is indeed changing. With rates rising elsewhere, attracting pools of capital away, and our economy going into a very slow phase for an extended period of time, it’s going to be tough for the broader market to participate uniformly.”